Breaking Down Ameresco, Inc. (AMRC) Financial Health: Key Insights for Investors

You're looking at Ameresco, Inc. (AMRC) and trying to map out if the massive demand for energy infrastructure is actually translating into shareholder value, and honestly, the 2025 numbers show a company executing on its pipeline, not just promising one. The financial health is defintely solid, anchored by a record total project backlog-which is simply the value of unbilled work-that hit a staggering $5.1 billion as of the third quarter of 2025. Here's the quick math: that backlog, combined with long-term operations and maintenance (O&M) contracts, gives Ameresco, Inc. nearly $10 billion in total revenue visibility, which is a powerful buffer against market swings. Still, management's full-year 2025 guidance is precise, targeting revenue at the midpoint of $1.9 billion and Adjusted EBITDA around $235 million, proving they are turning those big contracts into real cash flow. We need to look closely at how they convert that $5.1 billion backlog into realized revenue, but the foundation is there.

Revenue Analysis

You're looking for clarity on where Ameresco, Inc. (AMRC) actually makes its money, and the picture for the 2025 fiscal year is one of strong project execution coupled with a growing, high-margin recurring base. The direct takeaway is that while the Projects segment drives the bulk of the top line, the Energy Assets business is what gives the company its long-term financial resilience.

Management has reaffirmed their full-year 2025 revenue guidance, projecting a midpoint of approximately $1.9 billion, which is a solid figure given the complex market dynamics. Honestly, that kind of visibility is gold in the energy infrastructure space. The company's revenue streams break down into three primary categories: Projects, Recurring Revenue, and Other. It's a portfolio approach, so they don't rely on just one source.

Breaking Down the Primary Revenue Sources

The Projects segment-which includes design, engineering, and construction of energy efficiency and renewable energy solutions-is the primary revenue engine. For the third quarter of 2025 (Q3 2025), Projects revenue hit $410.0 million, representing nearly 78% of the total quarterly revenue of $526.0 million. This is their core competency, the big contracts that move the needle.

But the real story for investors is the Recurring Revenue. This stream, which includes Energy Assets and Operations & Maintenance (O&M) services, provides stability. In Q3 2025, total Recurring Revenue was $93.3 million. The Energy Asset revenue specifically grew 6% year-over-year to $62.5 million in Q3 2025, driven by the expanding portfolio of owned assets. This segment is defintely where the high-margin profitability lives, even if it's a smaller part of the total revenue pie.

Here's the quick math on the Q3 2025 breakdown:

Growth Trends and Strategic Shifts

Ameresco, Inc. (AMRC) delivered a 5% year-over-year revenue growth in Q3 2025, with Projects revenue growing 6% and Energy Asset revenue also growing 6%. This shows solid, albeit moderating, growth across the key segments. The O&M portion of the recurring business also had a strong quarter, increasing 8%. For a deeper dive into who is betting on this growth, you should check out Exploring Ameresco, Inc. (AMRC) Investor Profile: Who's Buying and Why?

What this estimate hides is a significant strategic pivot. The company is actively shifting its focus, which is a key change in revenue mix. The 'Other' revenue stream declined due to the year-end 2024 sale of AEG, a non-core asset. Also, the mix of their development pipeline is changing fast:

• The total project backlog stood at $5.1 billion as of Q3 2025.
• Energy infrastructure-related projects now make up almost half of the total project backlog.
• Batteries now account for 41% of assets in development, up sharply from only 22% of operating assets.

This massive tilt toward battery storage and large-scale energy infrastructure, especially for data centers, shows where the future revenue-and profit-will come from. The company is smart to pivot to where the high-density computing demand is driving the need for resilient, quick-deploy power solutions. Finance: keep a close eye on the gross margin of the new infrastructure projects versus the traditional energy efficiency contracts.

Profitability Metrics

You need to know if Ameresco, Inc. (AMRC) is not just growing revenue, but also keeping enough cash after costs to justify the risk. The direct takeaway from the Q3 2025 results is a positive margin trend this year, but the overall profitability remains tight, which is typical for a project-heavy, energy solutions business.

The company is showing better operational efficiency in the near-term, with the Gross Margin improving sequentially throughout 2025. This is defintely a key signal. For the third quarter ended September 30, 2025, Ameresco, Inc. (AMRC) posted a Gross Margin of 16.0% on revenues of $526.0 million. This 16.0% is a solid step up from the 15.5% seen in Q2 2025, showing management is getting better control over project costs and execution.

Breaking Down the Margins

When you look past the cost of goods sold (COGS) to the full operational picture, the margins tighten considerably. The Operating Margin (Earnings Before Interest and Taxes, or EBIT) for Q3 2025 came in at 8.1%, translating to an Operating Profit of roughly $42.61 million. This 8.1% is an improvement of one full percentage point year-over-year, which shows the operating leverage-the ability to grow profit faster than revenue-is finally starting to kick in. Still, the Net Profit Margin, which is what's left for shareholders, was only 3.52%, derived from $18.5 million in net income on $526.0 million in revenue.

Here's the quick math on the full-year picture: analysts project Ameresco, Inc.'s full-year 2025 Net Income to be around $43.52 million on projected total revenue of $1.9 billion (the midpoint of their guidance). That puts the full-year projected Net Margin at a slim 2.29%. That's a low-margin business, but that's the nature of large-scale construction and engineering projects.

Industry Context and Operational Efficiency

The margins at Ameresco, Inc. are lower than many pure-play utility or independent power producer (IPP) companies, but that's because Ameresco is fundamentally an energy efficiency solutions provider. They act as an Engineering, Procurement, and Construction (EPC) firm for much of their revenue, which is a lower-margin business model. Historically, the company's operating margin of 6.7% over the last five years has been considered weak for an industrials business. The recent Q3 2025 improvement to 16.0% Gross Margin is a good sign of operational efficiency, particularly in cost management and project execution.

The key to understanding the trend is the mix of business. The higher-margin revenue comes from their Energy Asset portfolio (IPP), where they own and operate the assets. This business segment is growing, and its long-term contracts are a major source of stable, high-margin revenue. A competitor focused on asset ownership, for example, might see Gross Margins closer to 45% on their IPP portfolio, which highlights the margin difference between Ameresco's project-based work and its asset ownership. The continued growth in their Energy Asset revenue, which increased 6% to $62.5 million in Q3 2025, is what will drive overall margin expansion over time.

• Focus on the Gross Margin trend: three consecutive quarters of improvement in 2025 signals better project management.
• Watch the Net Margin: The projected 2.29% for FY 2025 leaves little room for error.
• The growth in Energy Asset revenue is the long-term margin catalyst.

For a deeper dive into the company's strategic positioning and valuation, check out the rest of our series on Breaking Down Ameresco, Inc. (AMRC) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You're looking at Ameresco, Inc. (AMRC) and wondering how they pay for their massive energy projects. The short answer is: mostly with debt, which is typical for a capital-intensive business like renewable energy and energy efficiency. Still, you need to understand the composition of that debt and what it means for risk.

As of the quarter ending September 2025, Ameresco, Inc.'s debt-to-equity (D/E) ratio stood at 1.85. This ratio measures the company's total debt against its total shareholder equity, essentially showing how much debt is used to finance assets versus shareholder funds. For a company that builds and owns energy assets-projects that generate long-term, predictable cash flows-a D/E ratio in this range is not surprising, but it's defintely on the higher side compared to a non-asset-heavy tech company, for example.

Here's the quick math on their financing structure, with all figures in millions of U.S. Dollars as of September 2025:

The majority of the company's debt is long-term, which is a good sign, as it aligns with the long-life nature of their energy assets. But, the total debt load is significant. The D/E ratio of 1.85 is high, especially when you consider that a ratio above 1.0 means the company is primarily funded by creditors rather than owners. For capital-intensive industries, a D/E of up to 2.0 or 2.5 is often considered manageable, but Ameresco, Inc.'s ratio is pushing that boundary.

The company balances its corporate debt-used for general working capital and operations-with project-specific debt, or 'Energy Asset Debt.' This is a crucial distinction. As of the third quarter of 2025, their total corporate debt (subordinated debt, term loans, and revolving credit) was $300.2 million, while the Energy Asset Debt was much larger at $1.6 billion. This project debt is often non-recourse, meaning it's secured only by the specific energy asset, which limits the risk to the parent company's balance sheet if a single project fails. This is how they manage to grow so fast.

• Execute project financing: Ameresco, Inc. successfully secured approximately $180.0 million in new project financing commitments in Q3 2025 alone.
• Financial risk signal: The Altman Z-Score, a measure of bankruptcy risk, is low at 1.17 as of November 2025, putting the company in the distress zone and highlighting the risk of this high leverage.
• No major credit rating changes: The company has not announced a major credit rating change or large-scale refinancing in the immediate past, focusing instead on continued, project-by-project debt execution.

The core of the strategy is using project-level debt to fund growth, then using equity and corporate debt for the essential services and development pipeline. It works, but it means their financial strength rank is only a 4 out of 10. If you want a deeper dive into who is betting on this debt-fueled growth, you should check out Exploring Ameresco, Inc. (AMRC) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You want to know if Ameresco, Inc. (AMRC) has the cash to cover its near-term bills and fund its growth. The short answer is yes, but the numbers tell a more complex story, which is typical for a capital-intensive, project-based business like this.

Looking at the most recent data, Ameresco, Inc.'s liquidity position is adequate, not exceptional. The company's current ratio-which measures current assets against current liabilities-sits at about 1.51 (LTM). A ratio over 1.0 is good, meaning they can cover their short-term obligations. But honestly, for a clean energy infrastructure provider, you'd prefer to see it closer to 2.0.

The quick ratio, which strips out inventory (the least liquid current asset), is a respectable 1.20 (LTM). This tells me that even without selling off project inventory, Ameresco, Inc. has more than a dollar of highly liquid assets for every dollar of immediate liability. That's defintely a clean margin of safety.

• Current Ratio: 1.51 (Adequate short-term coverage).
• Quick Ratio: 1.20 (Solid immediate liquidity).

Working Capital and Cash Flow Swings

Working capital-the difference between current assets and current liabilities-is constantly in flux due to the nature of their projects. Ameresco, Inc. often has to fund upfront costs for materials and labor before receiving full payment from customers, which can strain working capital and necessitate external financing. This is why corporate debt increased in Q2 2025, specifically to support these working capital needs as the business expanded.

The cash flow statement overview shows a critical near-term improvement. While the last twelve months (LTM) operating cash flow (OCF) was negative at -$19.09 million, the company has shown a strong pivot. In Q3 2025 alone, Ameresco, Inc. generated approximately $64 million in adjusted cash flows from operations. This significant positive swing reflects better discipline in working capital management, specifically aligning vendor payments more closely with project milestones and progress.

Here's the quick math on Free Cash Flow (FCF): The LTM FCF is a deeply negative -$399.20 million, largely due to substantial capital expenditures of -$380.11 million for building out their Energy Asset portfolio. But, the most recent quarterly FCF was a positive $17.71 million in Q3 2025. This reversal suggests the cash-intensive phase of some projects is shifting to the cash-generating phase, which is a major opportunity.

Assessing Liquidity Strengths and Concerns

The primary liquidity strength is the structure of their debt and the recent cash generation. Ameresco, Inc. closed Q3 2025 with about $95 million in cash. Plus, a significant portion of their total debt, which includes $1.6 billion in Energy Asset Debt, is project-specific and non-recourse to the corporate balance sheet. This means the project assets themselves, not the parent company, are primarily responsible for that debt, preserving corporate liquidity for working capital and strategic investments.

The main concern remains the substantial capital outlay required for growth, which is why the LTM FCF is so negative. They are investing heavily to capture the massive demand for energy infrastructure, like the new projects in data centers and industrial sectors. What this estimate hides is that the long-term cash generation from these assets should eventually dwarf the upfront costs. You can dive deeper into the business model and strategy in our full analysis: Breaking Down Ameresco, Inc. (AMRC) Financial Health: Key Insights for Investors.

Finance: Track the quarterly FCF trend closely; a sustained positive trend is the best signal of improving financial health.

Valuation Analysis

You're looking at Ameresco, Inc. (AMRC) and asking the core question: Is it a buy, a hold, or a sell right now? The quick answer is that while Wall Street analysts maintain a consensus Buy rating, the current stock price of around $33.72 as of November 12, 2025, sits above the average 12-month price target of approximately $31.75. This suggests the market is pricing in more near-term growth than the average analyst model, meaning the stock appears technically overvalued against those targets.

To be fair, this is a growth stock in a hot sector-energy efficiency and renewables-so traditional valuation metrics (multiples) often look stretched. You have to see if the growth justifies the premium you're paying today. Here's the quick math on where Ameresco, Inc. stands on key multiples for the 2025 fiscal year.

Key Valuation Multiples (FY 2025)

The company's valuation multiples reflect high expectations for future earnings, which is common for firms focused on large-scale infrastructure and clean energy projects. The trailing Price-to-Earnings (P/E) ratio is high, and the forward P/E is even higher, which signals expected near-term earnings pressure or significant future growth that is still unproven.

• Trailing P/E Ratio: 27.03.
• Forward P/E Ratio: 38.34 (based on 2025 earnings estimates).
• Price-to-Book (P/B) Ratio: 1.61.
• Enterprise Value-to-EBITDA (EV/EBITDA): 17.4.

A P/B ratio of 1.61 is relatively modest for a growth company, but the EV/EBITDA of 17.4 is what you need to focus on. That's the Enterprise Value (market cap plus debt minus cash) relative to its core operating cash flow (Earnings Before Interest, Taxes, Depreciation, and Amortization). It's a premium multiple that implies a defintely high valuation compared to the median for the broader industrials sector.

Stock Price Momentum and Volatility

The stock has seen a wild ride over the last year. The 52-week range tells the story: a low of $8.49 and a high of $44.93. That's a massive swing. The good news is that Ameresco, Inc. has shown strong momentum recently, posting a year-to-date rise of 59% as of early November 2025, driven by solid third-quarter earnings and new contract wins in clean energy infrastructure. This recent surge is what's pushing the stock past some analyst targets.

What this estimate hides is the inherent volatility in project-based businesses. If onboarding takes 14+ days, or if supply chain disruptions slow project execution, earnings momentum can dampen quickly. That's the primary risk baked into the high multiple.

Dividends and Analyst Outlook

Ameresco, Inc. is not a dividend stock. The dividend yield is 0.00% and the payout ratio is 0.00. The company reinvests all available capital back into its growth projects and backlog, which is typical for a firm prioritizing expansion over income distribution. You're investing in capital appreciation, not income.

The analyst consensus remains a Buy, with 8 out of 9 analysts surveyed recommending a Strong Buy or Buy, and only 1 recommending a Hold. Still, the average 12-month price target is $31.75. This creates a disconnect: analysts like the long-term story but see the stock as having limited upside from the current price of $33.72. One valuation narrative even pegged the stock as 7.8% Overvalued against its calculated fair value earlier this month. The market is betting on the company's rapidly growing project pipeline to convert into revenues faster than the conservative analyst models predict. For a deeper dive into the company's financial structure, check out Breaking Down Ameresco, Inc. (AMRC) Financial Health: Key Insights for Investors.

Your next step is clear: Finance needs to model a sensitivity analysis on the 2026 EBITDA estimates, assuming a 10% delay in project conversion, and see how far the fair value drops. Draft that view by Friday.

Risk Factors

You're looking at Ameresco, Inc. (AMRC) with a long-term mindset, and that means mapping the risks that could derail their impressive backlog growth. The company is navigating a complex energy transition landscape, and while demand is robust-driving the total project backlog to a massive $5.1 billion as of Q3 2025-several operational, financial, and external factors still require your attention. Simply put, the biggest threats are execution on massive new projects and the cost of capital.

The core challenge is translating that backlog into predictable, high-margin revenue, especially with the business model being inherently lumpy, meaning revenues can fluctuate significantly from quarter to quarter. Ameresco is mitigating this by growing its recurring revenue streams from Operations & Maintenance (O&M) and Energy Assets, but the project segment remains the primary driver of volatility. For a deeper look at who is betting on this growth, check out Exploring Ameresco, Inc. (AMRC) Investor Profile: Who's Buying and Why?

Operational and Execution Hurdles

The shift toward large, complex projects-like the 350-megawatt (MW) data center power solution for CyrusOne-introduces significant execution risk. Scaling operational capacity to handle these mega-projects is a persistent challenge, even with internal restructuring efforts. If a major project is delayed, the revenue and earnings timing can shift, which impacts short-term financial results. Ameresco's management is addressing this by leveraging prior acquisitions and focusing on disciplined project management, but the risk defintely remains.

Another operational headwind is the persistent supply chain constraint, particularly concerning battery procurement for their growing energy storage segment. Batteries now account for 41% of their assets in development, up from 22% of operating assets, making this a critical vulnerability. They are using contract safeguards and supplier diversification to manage this, but global tariffs and component shortages still threaten project timelines and margins. It's a high-stakes game of logistics.

Financial and Market Volatility Risks

Ameresco's growth is capital-intensive, which shows up clearly on the balance sheet. As of Q3 2025, the company reported total corporate debt of approximately $340 million. This debt load gives the company a debt-to-equity ratio of 1.55, which is high and indicates a reliance on debt financing to fund their massive project pipeline. Here's the quick math on their leverage:

• Total Corporate Debt (Q3 2025): $340 million
• Adjusted EBITDA (Q3 2025): $70.4 million
• Debt-to-EBITDA Leverage Ratio: 3.2 times

While their current debt-to-EBITDA leverage ratio of 3.2 times is below the covenant level of 3.5 times, it still means they carry a lot of leverage. Plus, the stock itself is highly volatile, with a beta of 2.33. That means if the broader market moves 1%, Ameresco's stock has historically moved 2.33% in the same direction-it's a high-risk, high-reward profile.

External and Regulatory Pressures

The company's significant reliance on government contracts-including federal, municipal, and utility clients-exposes it to regulatory and political risks. A prime example is the risk of a prolonged federal government shutdown, which management cited as a potential cause for delaying project award conversions and shifting revenue timing. While they proactively implemented contingency plans to minimize disruption in Q3 2025, any future shutdown could still impact the conversion of their contracted backlog, which stood at $2.5 billion.

Beyond government funding, changes to incentives and environmental regulations pose a constant threat. Ameresco is a beneficiary of supportive policies like the Inflation Reduction Act (IRA), but any future modification or repeal of these tax credits and incentives could dramatically alter the economics of their energy asset business. The table below summarizes the key risks and the company's stated mitigation efforts:

Growth Opportunities

You're looking past the current quarter's noise, and honestly, that's the right move. For Ameresco, Inc. (AMRC), the near-term picture is solid, but the real story is their strategic positioning for a massive shift in energy infrastructure. They aren't just selling solar panels; they're building the resilient, decentralized power systems that the US economy defintely needs.

Management has reaffirmed its 2025 guidance, which gives us a clear runway. They expect full-year revenue to land between $1.85 billion and $1.95 billion, with the midpoint sitting at a healthy $1.9 billion. More importantly, the long-term target is to deliver 10% revenue growth and a substantial 20% adjusted EBITDA growth, which shows confidence in their high-margin Energy Asset and recurring Operations & Maintenance (O&M) segments.

Key Growth Drivers: Data Centers and Battery Storage

The biggest growth drivers are tied to grid instability and the surging demand from high-power users. Ameresco is pivoting hard into the data center space, which is a huge opportunity. They are finalizing a deal with CyrusOne for the Lemoore data center, a project scalable up to 350 megawatts, which is a clear signal of their capacity for large-scale, complex infrastructure.

Their backlog backs this up. The total project backlog is a record $5.1 billion, and almost half of that is now tied to energy infrastructure and resiliency projects. Battery Energy Storage Systems (BESS) are a core product innovation here, moving from a smaller part of their business to a major focus:

• Batteries now account for 41% of assets in development.
• This is up from only 22% of their current operating assets.
• A recent win includes a 50-megawatt BESS with Nucor.

Strategic Moves and Competitive Edge

Ameresco's competitive advantage isn't just in the technology; it's in their business model and their willingness to go beyond traditional renewables. They are a cleantech integrator, meaning they are vendor-agnostic. They can combine solar, biogas, microgrids, and even explore emerging technologies like Small Modular Reactor (SMR) nuclear power, giving clients a customized solution instead of a single-product hammer.

Plus, their recent strategic moves are all about deepening their service offering and expanding their geographic footprint. In March 2025, they acquired Asacontrols, which immediately expanded their expertise in smart buildings and controls, making their end-to-end service even more comprehensive. They are also seeing continued market expansion in Europe, which now accounts for about 20% of their total backlog.

Here's a quick look at the 2025 financial guidance you should keep an eye on:

The company's ability to finance these projects through innovative models like Energy Savings Performance Contracts (ESPCs) also lowers the hurdle for clients to commit to large-scale infrastructure upgrades. This is what makes their backlog so sticky. If you want to dive deeper into the full financial picture, you can read the full analysis here: Breaking Down Ameresco, Inc. (AMRC) Financial Health: Key Insights for Investors.

Next step: Look closely at the conversion rate of that $5.1 billion backlog into recognized revenue over the next few quarters. That will be the key indicator of execution risk.